GMS 522 Chapter 2 International Trade Policy

·         Allows countries to specialize in the production of those products they are best suited to producing

·         Specialization promotes greater efficiency and productivity (contributes to economic growth)

·         Consumers have access to have wider range of product

·         Source of tax revenue for governments

 

Exports: good manufactured in home country and sold in foreign country

Imports: produced in foreign country bought by home country

 

Mercantilism

·         Economic was viewed as a zero sum game

·         Stimulate exports and curtail imports in order to produce a positive balance of trade

·         Subsidized exports, high tariff imports

·         Labour was most significant factor, low labour costs translated into increased competitiveness in export markers
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